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apogee
climber
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The Hostage Crisis Continues: Why Obama Can't Pivot to Jobs and Growth
Posted: 8/2/11 05:31 PM ET
Robert Reich, Chancellor's Professor of Public Policy, University of California
(excerpt)
More importantly, the deal he just signed makes it impossible for the president and Democrats to launch any major jobs program -- no WPA or Civilian Conservation Corps, no major lending program to cash-starved states and locales, no new help for distressed homeowners, and so on. Nada.
"We've got to do everything in our power to grow this economy and put America back to work," the president says, now that the hostage crisis is over.
But the sad truth is he and the nation remain hostage to the ideology of right-wing Republicans who won't let the government spend more money. Yet if the government can't spend more -- at least this year and next, until the pump is primed and the economy is growing again -- we won't see job growth. And without job growth, the economy will remain anemic.
That's why even the stock market is reacting badly to the end of the hostage crisis.
http://www.huffingtonpost.com/robert-reich/obama-jobs-budget-deal-_b_916556.html
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JEleazarian
Trad climber
Fresno CA
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HDDJ,
The theory behind government expenditures as economic stimulus is that those expenditures provide work for people who otherwise would have none. I believe that this worked during the Great Depression, as re-armament brought the unemployed into the work force in Europe and the US. I should mention, though, that WWII also saw forced saving by the American people, since rationing limited the manufacture of consumer goods.
Unfortunately, the situation in the Great Depression differed from that of the last recession. (Contrary to Rokjox's assertion, there have been plenty of other post-WWII recessions that were very deep, indeed. The difference between those and this is that this one has had an unusually slow recovery).
The Great Depression represented a real drop in production and wealth, caused by trade wars that decreased international trade, forcing firms to try to use inferior factor combinations, resulting in decreased productivity. The most recent recession, caused by the drop in the real estate market, reflected a needed market correction.
While both the Great Depression and the most recent recession caused a decrease in nominal wealth, the cure for each was different. The stimulus was advertised to be an increase in needed infrastructure spending. In fact, much of it was simply make-work for union workers, without much thought to what was really needed in public investment. I could point to much work right around the Big Raisin here that amounted to "bridges to nowhere."
Unfortunately, the money the government spends has to come from somewhere. New, higher, taxes, would have killed any recovery, so we borrowed the money. We borrowed so much, however, that those who actually consider future economic events see that either we must cut back on needed expenses in the future, or default on our obligations, to pay for what we just spent and, often, wasted.
If we had genuinely performed public investment, I thing the "stimulus" could have worked. Instead, we just gave the money to friends of the administration, and told them to go out and spend it. That money didn't trickle anywhere except down the drain.
Add to that an administration whose actions have consistently been hostile to business, and it's easy to see why businesses haven't expanded production the way they have in previous recoveries. The administration needs to understand that business is not the enemy, and the economy is not a zero-sum game. Ridiculous things like the NLRB suit against Boeing need to end in this administration before business has any faith in the future sufficient to build new plants and hire new workers.
If you want a dissertation complete with graphs and footnotes on this, you won't get one from me today -- I don't have the time, and I just got some work to do, but that's what happened.
John
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HighDesertDJ
Trad climber
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John-
Thanks for an actually reasonable, if grossly oversimplified, response. There are some pretty massive logic leaps you are making, however. One being that the stimulus did not keep people in jobs who otherwise would have been out of work. Also, the assertion that the money was simply "given away to friends of the administration" seems pretty bogus. If anything the money was spent too slowly, not too quickly. As Obama said he discovered, there was no such thing as a "shovel-ready project."
Lastly, I have yet to see any real data showing that business is being held back by a large increase in government debt. Markets swung up thousands of points while this debt was acquired. They are responding poorly after a decision to CUT debt and deficit. The idea that a giant increase in debt has led to less jobs seems mostly to be floated by those who simply want to use something, anything, to justify their ideological desire to see a smaller government budget.
Most of us would like to see a real investment in infrastructure. Unfortunately, we are now unlikely to get it.
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Nibs
Trad climber
Humboldt, CA
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John, that is not "what happened." it is your version of what happened. Half of the 'stimulus' was in the form of more tax cuts/breaks for the moneyed elite.
Ask any ASCE member whether they think enough money was spent on infrastructure projects and you will get a NO. This country is literally falling apart. Government investment in infrastructure projects is desperately needed - that is a fact; it is a reality. That investment would produce jobs; the middle class with money to spend increases demand driving the economy. (you do not need an economics degree to figure that out - what we need in congress are more engineers and fewer lawyers)
The conservative narrative would have you all believe that the wealthy are the engine that drives the economy so do not raise their taxes. We have seen 10 years of tax breaks for the wealthy - how has that been working out for us?
again, the engine that drives the economy is the middle class -the workers who ACTUALLY produce something whether it is a good or service.
and I further call you on your BS - name one of your "bridges to no where." I work in AEC and know what it takes to get a project through the EIR process and built. It may work that way in Alaska, but it does not in the lower 48.
[edit]: HDDJ has it right - said concisely too.
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HighDesertDJ
Trad climber
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Skipt said The stimulus money would have been better served staying in the private sector which has a much better track record of spending their own money.
Um.....yeah. Maybe you should avoid making accusations about "lack of logic" in other people's posts before you make posts like this. I'm sure you'll have a creative justification after the fact about how this statement is actually sensible.
*edit* In case you can't yet spot the problem, it's the part where you think the money was "taken from" the private sector.
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Nibs
Trad climber
Humboldt, CA
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then we agree that the government needs to spend more money NOW whereas federal budget cuts are taking us in the wrong direction.
thanks skipt, I missed that...
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HighDesertDJ
Trad climber
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Oh no! Skipt has no actual facts or ideas and so he's fallen back on attacking my character! MY FRAGILE EGO!!
Skipt quipped You need to go back to school and learn the difference between what is "nonsensical" and what is another opinion.
I'm sorry but the fact that the money wasn't "taken" out of the private sector isn't an opinion. Maybe you should go back to school to learn the difference between the future and past tenses.
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HighDesertDJ
Trad climber
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That is, as you have pointed out, entirely your opinion. You have a habit of saying things aren't true and providing no substantive backing. Kind of like now.
You are welcome to your opinion.
skipt said You are an angry and bitter man.
Quoted for irony.
John, please hop back in here when you can. You are a good poster.
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JEleazarian
Trad climber
Fresno CA
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rokjox,
I apologize for misreading your earlier post about "the" recession, etc. You're right. You did not contend this was the only recession.
However, it appears that we don't agree on what constitutes the "stimulus." I don't consider the bailouts of creditors of various companies as "stimulus" expenses. Many conservative Republicans and liberal Democrats opposed those bailouts, but the center of both parties supported them. I think the jury's still out (to use a metaphor from my former full-time employment), but peronsally, I have my doubts that this was money well-spent.
I agree with Nibs that tax cuts were part of the stimulus, but the only tax cuts I consider to be true reductions were the rebates under W., and the FICA decrease under Obama, neither of which were tax breaks for "the rich" (whoever they are).
The main "stimulus" funds, however, were for alleged infrastucture expense that I contend was wasted to employ union workers, regardless of the need for any particular project. Did we really need those curbs on the road from Yosemite Valley to the South Entrance? Was that the highest and best use of the money?
In Fresno, for example, they used some of the money to install traffic signals in the place of four-way stop signs. Unfortunately, though, the interesections are just as crowded -- and sometimes slower -- because they didn't use the money to acquire right of way to widen them. Acquiring right-of-way didn't pay union workers.
As Nibs correctly points out, we still need lots of infrastructure improvements and maintenance. Unfortunately, our ability to pay for the borrowed funds now has been compromised by how much we spent -- and mis-spent -- in the last three years (I'm using three because the Pelosi-Reid Congress spent an awful lot during W's last year).
My beef with the "stimulus" remains that it was too restricted, and too intent on preserving the economic status quo, rather than dealing with a changing economy. Instead of buying GM and Chrysler, and destroying rights of secured creditors in the process, I think that money would have been better spent on the equivalent of a GI Bill for displaced workers. My cynicism leads me to believe the reason we didn't do that is that it didn't benefit Democratic contributors enough.
That's how the "stimulus" hurt us. Cutting government spending in a recession is normally like raising taxes in one -- contractionary. But because we've spent so much, and promised so much more in entitlements, our ability to spend freely ran out. I wish it weren't so, but that's how I see it.
John
P.S., HDDJ, thanks, but flattery will get you nowhere!
I agree th
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TGT
Social climber
So Cal
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Official now
US borrowing tops 100% of GDP:
Treasury
(AFP) – 1 hour ago
WASHINGTON — US debt shot up $238 billion to reach 100 percent of gross domestic project after the government's debt ceiling was lifted, Treasury figures showed Wednesday.
Treasury borrowing jumped Tuesday, the data showed, immediately after President Barack Obama signed into law an increase in the debt ceiling as the country's spending commitments reached a breaking point and it threatened to default on its debt.
The new borrowing took total public debt to $14.58 trillion, over end-2010 GDP of $14.53 trillion, and putting it in a league with highly indebted countries like Italy and Belgium.
http://www.google.com/hostednews/afp/article/ALeqM5jsIJrjNbFnHfTteRFzNM3vLqKiug?docId=CNG.1990c2943612788ba4bed492da11c97b.891
Wait for the crash tomorrow.
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jstan
climber
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http://www.kitco.com/charts/livegold.html
During Tuesday the price of gold increased 3%. China's sovereign wealth fund took a $30,000,000,000 loss that day, at least in terms of gold. Switzerland is working to lower its interest rates to reduce the flow of hot money into the frank. That flow has been large recently.
We were warned one of the intermediate term effects of our little debt ceiling drama, is widening efforts by those overseas to find a new reserve currency. For an extended period of time 80 cents out of every dollar saved in the world has been coming to the US. The dollar's role as a global reserve currency played a major role in maintaining our high standard of living for the last decade and more.
If China puts in place a schedule driven reduction of its dollar holdings, other sovereign funds will have little choice but to look at doing the same and interest rates and taxes in the US will have to rise. The Fed has shot the greater portion of its ammunition, so don't look for help there.
Till now some 42% of the world's military spending has been by the US. That has to change, substantially. Our day as "The World's Only Superpower" is fast fading.
Iraq was the kickoff for a couple trillion reasons
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Nibs
Trad climber
Humboldt, CA
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John, appreciate the response.
From an AEC point of view what little stimulus money did make to infrastructure improvements was not directed at keeping union workers employed; it was keeping our industry employed. AEC professionals are not Union. Those funds have kept me busy for the last two years working on EIR's and construction documents. Some of these grants, for example, go to small rural communities that have failing septic systems that pollute our waters and limit the growth of their businesses. We all benefit from these improvements (I'll spell that out if do not see it and if I have time later).
regarding your examples...tough to defend a project that i do not know the particulars; curbs direct drainage to where the engineer wants it to go; prevents erosion - can even treat storm water that otherwise carries suspended particles into the Parks pristine waters. It may not have been "let's keep the union workers busy" project.
Hopefully your lighted intersections are a phased project with other phases yet to be completed...was that a Caltrans, county or city project?
absolutely agree that stimulus money should have gone into a new form of GI bill (always good to find and knowledge common ground). That Harry Truman was a smart, hard working, straight talking dude.
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Nibs
Trad climber
Humboldt, CA
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but Mr. Stannard, it's the "New American Century." at least, that is what the neo-cons told us...
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Nibs
Trad climber
Humboldt, CA
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"It will be a "New American Century", when we reduce the benefits of SS and Medicare."
right...how about a constructive response from you regarding Mr. Stannard's post? Do you have ANYTHING constructive to add?
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Mighty Hiker
climber
Vancouver, B.C.
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Perhaps Jeff could tell us whether the US gets anything for the billions of dollars it provides to "have" nations such as Israel? Not aid for the "have not" nations - that's not only a moral thing to do, but helps with world stability. But why subsidize a country that doesn't need or deserve it? Shouldn't that be the first thing to be chopped? It's money down the drain - the US doesn't get anything for it, apart from abuse, and a bad rep.
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HighDesertDJ
Trad climber
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John posted My beef with the "stimulus" remains that it was too restricted, and too intent on preserving the economic status quo, rather than dealing with a changing economy. Instead of buying GM and Chrysler, and destroying rights of secured creditors in the process, I think that money would have been better spent on the equivalent of a GI Bill for displaced workers. My cynicism leads me to believe the reason we didn't do that is that it didn't benefit Democratic contributors enough.
I realize this gets tricky since there were numerous programs all labeled "socialist" happening in close proximity of each other, but what you speak of was not part of the stimulus package. You are at least partially right, I'm sure part of it was because of union jobs and a Democratic government (not exactly a shocker there, just like it was no surprise when Bush didn't do a damn thing to clean up "corporate corruption" after the Enron/Worldcom fiascos). Both parties are interested in preserving their chunk of the status quo. It was also simply about not wanting to be the guy who stood by while the American car industry fell into the toilet, costing a whole lot more than just the union jobs at GM. There are hundreds of thousands of workers employed by hundreds of small businesses that supply those companies. The ripple effect would have been enormous and I'm sure that the view from the inside was particularly horrifying.
The job monthly losses that were already happening were colossal and it's a lot easier to remain ideologically pure when it's not your responsibility. That's why Bush started doing the exact same thing that Obama kept doing.
Fatty said It will be a "New American Century", when we reduce the benefits of SS and Medicare for those who can already afford good healthcare and retirement
Fixed that for ya
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HighDesertDJ
Trad climber
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http://www.nytimes.com/2011/08/03/us/03muslims.html?src=recg
A decade after the Sept. 11 terrorist attacks, a Gallup poll released Tuesday found that the vast majority of Muslim Americans say they are loyal to the United States and optimistic about the future, even though they are more likely than other religious groups to say they recently experienced discrimination.
The "clash" continues. (between Fatty and reality)
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HighDesertDJ
Trad climber
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Dr. F- If you buy the propaganda and all the other news outlets are pushing the "liberal agenda" then technically FOX would need to beat all of their ratings combined. Yet another logic gap.
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HighDesertDJ
Trad climber
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Dr. F you are a little wound up.
http://www.nytimes.com/2011/08/04/us/politics/04obama.html?hp
But if you are already in the corner office, and it’s oval, you get to celebrate your 50th at a fund-raiser in a Chicago ballroom, with Jennifer Hudson singing “Happy Birthday,” Herbie Hancock jamming and 100 “friends” paying $35,800 a plate to commiserate over dinner, while bankrolling your bid to keep your job.
We are going to bury you guys in money...er...I mean "speech."
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